Updated October 8, 2026. Quick answer: Not by default. Tennessee is a common law state, but the Tennessee Community Property Trust Act lets spouses opt in: “spouses may classify any or all of their property as community property” by transferring it to a community property trust. The IRS lists nine community property states.
Tennessee community property at a glance
| Item | What the documents say |
|---|---|
| Regime | Common law; opt-in community property trust |
| At divorce | Property in a community property trust: the trust terminates and each spouse receives one-half, unless otherwise agreed in writing (section 35-17-108) |
| At a spouse’s death | Property in a community property trust: one-half is the survivor’s share and one-half the decedent’s (section 35-17-107) |
| Federal basis at the first death | Open: IRS Publication 555 does not address the federal treatment of the election in this state’s trust |
| Source | Tennessee General Assembly / Secretary of State (publications.tnsosfiles.com); IRS Publications 551 and 555; 26 U.S.C. 1014 |
What the Tennessee statutes say
The source is Public Chapter 658 of the Public Acts of 2010, the Tennessee Community Property Trust Act, effective July 1, 2010 and codified at Tennessee Code Annotated sections 35-17-101 to 35-17-108. The chapter does not make Tennessee a community property state. It gives married couples a way to choose community property treatment for the property they place in a qualifying trust.
The choice is open to couples whatever their domicile: the Act applies whether both, one, or neither spouse is domiciled in Tennessee, but the trust needs a qualified trustee, which can be a Tennessee-resident individual or a Tennessee-authorized fiduciary company.
How the opt-in trust works in Tennessee
- The trust “Expressly declares that the trust is a Tennessee community property trust” (section 35-17-103(1)).
- The trust “Is signed by both spouses” (section 35-17-103(3)).
- At least one trustee is a qualified trustee, and either or both spouses may serve as a trustee; a qualified trustee may be “A natural person who is a resident of this state” or a Tennessee-authorized fiduciary company (sections 35-17-102 and 35-17-103(2)).
- The trust opens with a statutory warning about the consequences of the choice (section 35-17-103(4)).
At divorce in Tennessee
On a divorce, section 35-17-108 ends the trust and the trustee divides it: the Act says “with each spouse receiving one-half (1/2) of each asset”, unless the spouses agree otherwise in writing. Property outside the trust follows Tennessee’s ordinary divorce rules, which this page does not cover.
At a spouse’s death in Tennessee
At a spouse’s death, section 35-17-107 provides that one-half of the trust property “reflects the share of the surviving spouse” and the other one-half is the decedent’s share.
What it does to basis when the first spouse dies
The federal rule for community property in a trust is not settled by the documents read. IRS Publication 555, the IRS’s guide to community property, says it “doesn’t address the federal tax treatment of income or property” subject to the community property election under the laws of Alaska, Tennessee and South Dakota. The statute that gives community property a new basis for the survivor, 26 U.S.C. 1014(b)(6), refers to “property which represents the surviving spouse’s one-half share of community property” held under the community property laws of a State.
What the state statute fixes is the split. As a computed illustration, if a Tennessee couple placed $400,000 of shares in a qualifying trust and the trust held it at a spouse’s death, the survivor’s one-half share is half of that value, or $200,000. Whether the whole $400,000 gets a new basis at that death is the open federal question; CMG’s page on community property trusts and the IRS covers it. On the same facts, a common law qualified joint interest would give the survivor a basis equal to the total of $200,000 plus $50,000, which is $250,000.
What the documents do not say
- Only the 2010 enacting act was read. Later amendments to Title 35, Chapter 17 were not retrieved, so check the current code before acting.
- The documents read do not say how the federal tax rules treat property in a Tennessee community property trust at the first spouse’s death.
Common mistakes
- Assuming every Tennessee couple owns community property. The Act applies only to property transferred to a trust that meets the statute’s requirements.
- Assuming the answer in this state settles it for a couple who move; the rules depend on the state where the spouses are domiciled and, for property in a trust, on the trust.
Related: community property states by state, community property trusts and the IRS, Tennessee retirement taxes, and Tennessee probate cost.
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Answer againSources
- Public Chapter No. 658, Public Acts 2010 (Tennessee Community Property Trust Act of 2010), adding Tenn. Code Ann. 35-17-101 et seq.: https://publications.tnsosfiles.com/acts/106/pub/pc0658.pdf
- IRS Publication 551, Basis of Assets (December 2025): https://www.irs.gov/pub/irs-pdf/p551.pdf
- 26 U.S.C. 1014, Basis of property acquired from a decedent (United States Code, 2024 Edition): https://www.govinfo.gov/link/uscode/26/1014?link-type=html
- IRS Publication 555, Community Property: https://www.irs.gov/pub/irs-pdf/p555.pdf
Sources: the primary documents linked above, read on October 8, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.